Meta Platforms and BlackRock announced on July 28 a partnership to develop and operate a data center campus in El Paso, Texas, with a total development cost of approximately $14 billion. Under the arrangement, BlackRock-managed funds will hold an 80% ownership stake while Meta retains 20%. BlackRock’s investment will be partially financed through $12.5 billion in debt, with Meta receiving a $1 billion distribution to align ownership stakes.
Meta’s contribution includes land and in-progress construction assets valued at approximately $2.3 billion, while BlackRock will provide roughly $4.9 billion in cash. Rather than owning the entire facility outright, Meta will enter into lease agreements with the venture to secure computing capacity. The campus is projected to become operational in 2028 and includes an initial four-year lease agreement with an option to extend for up to 20 years.
The deal addresses Meta’s substantial capital expenditure requirements, which have grown significantly in recent years. The company spent $72.2 billion on capital expenditures last year and has projected capital spending between $125 billion and $145 billion for 2026, with increases attributed to higher component pricing and data center costs related to AI infrastructure. By leasing rather than owning the facility, Meta preserves cash for other priorities including AI chips and technical talent while distributing the upfront capital burden to institutional investors.
Rating firm Moody’s noted that while the venture improves Meta’s financial flexibility, it does not reduce overall costs but rather shifts ownership structures. The arrangement is expected to lower Meta’s near-term cash funding requirements compared to a wholly-owned facility. However, analysts cautioned that Meta’s capital expenditures are projected to reach approximately 55% of sales in 2026 and 2027, potentially pressuring free cash flow generation. Risks associated with large-scale data center investments include extended payback periods and technological obsolescence threats, with Moody’s noting that returns may take years to materialize.
Hedge fund interest in both companies remains strong, with 262 hedge funds holding Meta stakes and 79 holding BlackRock positions. Short interest for both companies remained below 2%, suggesting limited investor skepticism about the long-term viability of the arrangement.
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